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Data, Challenges and Opportunities in the Insurance Industry

It is a question of making real and effective use of the intelligence available to insurers, of taking advantage of the asset represented by data in real-time and making it available to the entire organisation.

For several years, as part of our Insurance Vision, we have been recommending a series of actions for the CEOs of insurance companies so that they can respond to their main challenges. 

This year we wanted to carry out a prioritisation exercise and we have defined a set of key issues that should be at the top of the agendas of the sector's leaders. We have called it Insurance Focus 2023 and, without a doubt, the use and management of data is one of the five selected topics.

So much so that insurance companies have been undertaking data-related projects to transform themselves for more than two decades. In the beginning, the objective of these companies was to centralise information and to have a reporting system with which their central areas could make relevant decisions. Now, however, the great challenge is to take this understanding of data to all the company's operations, and all the processes in the value chain. 

It is a question of making real and effective use of the intelligence available to insurers, of taking advantage of the asset represented by data in real-time and making it available to the entire organisation. In short, it is all about making data actionable so that the company can take advantage of it at all key moments. 

While it is true that data analysis has always been something that has characterised the insurance sector (for example, through the calculation of actuarial models), the real challenge for these companies is not only to focus on the use of data for product definition but to take it to the rest of the points in the value chain, integrating data and analytics in processes that until now did not contemplate the tremendous possibilities of data. 

But in this journey towards data-driven, we must not forget another fundamental factor: technology. Another major challenge is related to the platforms and architectures used by insurers. They are enablers that allow them to be able to obtain and generate this value. 

Insurers, in general, have not been known for making large investments in infrastructures. However, there are many "winners" that are leveraging the use of purely cloud accelerators that help a lot in the transformation of data. These platforms also provide a much faster time-to-market.

Culture and talent

However, this transformation requires changes in the organisation of companies. Companies must establish processes, roles and structures that allow them to ease the transition to data-driven at all layers or levels. And, in this sense, cultural change is fundamental, so managers must be brave enough to break certain dynamics and inertia that have been maintained for years. 

It is also necessary to rethink the strategy for attracting talent in insurance companies, as this is a very specific type of talent. In the past, in the case of companies in the sector, the data was governed by the technology areas, but for some years now, the leadership has been taken by the business areas, which are the ones that define and design new products, services and business models. 

For this reason, it is essential to attract professionals who master and understand data, both from a technological perspective and from another view more oriented towards the growth and strategic evolution of the business. This fight for talent is reflected in the competition that takes place not only among insurers, who are looking for the best professionals but also among other players, such as technology providers, consulting firms and financial services companies.  

In the case of NTT DATA, we have also faced this talent challenge; and we have done so with a global approach. We have been incorporating different profiles for some years now, which has allowed us to move from a more technology-focused area to a strategy and consultancy model aimed at helping insurers to lead their markets. This transformation allows us to accompany our clients at all points of their value chain, adapting quickly to the different changes occurring in our sector.

How do we help insurers become data-driven? 

To give a recent example, I would like to share the case of an insurance company that had as one of its main challenges being able to bring data intelligence to real-time. In the past, their operations were more focused on the transactional side, on pure data, without aggregations or information enriched by analytical processes that would harm response time, key in a transactional system. However, now technology has evolved a lot and allows real-time data intelligence to be carried out without penalizing it.

Our solution involves the identification and selection of a series of tools that make it easier for the insurer to offer its customers the information in real-time through its different digital channels. The aim is to make the data available in the shortest possible time so that the user can find out about it and operate with it if necessary. 

This change, enabled by modern and scalable architectures, allows the different systems to talk to the data lake; in this way, the insurer avoids having to depend on transactional systems, not designed to process information models in real-time, so it can offer a much more agile and efficient customer experience. 

But it's not just about scale, about data volume. There is also a qualitative jump in the data obtained. We are no longer talking only about internal data sources, but also about external sources; and in different formats (structured and unstructured, images, etc.). We are therefore witnessing a real revolution in data management, both in terms of the amount of information and the different types of inputs. And this is the success of this use case, to be able to help manage large volumes of information, but at the same time characterized by its high quality.

At NTT DATA, we have documented more than 100 use cases along the entire insurance value chain in the white paper "Data Across the Insurance Value Chain". This detailed analysis allows us to understand at what precise moment data needs to be actioned; not only from the perspective of human interaction (people decisions) but also from the point of view of data automation.

Aligning strategy and data management, a winning tandem

The most important thing when it comes to data is for insurers to understand what the purpose of their data strategy is; it is critical that they know where they want to go, but they also need to know where they are starting from. Every insurer, due to cultural and other aspects, has a different level of maturity when it comes to data management. It is not a question of all companies taking the same steps, but of being aware of the systems and the quality of the information they have. 

From NTT DATA we are helping our clients to know and follow that path, identifying the starting point, defining different intermediate points and advising on the best way to achieve them, of course, helping to define the destination they want to reach in relation to the company strategic plan.

Header photo by Rodion Kutsaiev on Unsplash

José Ramón Olmedo
José Ramón Olmedo
Head of Data at NTT DATA Insurance Spain
Published on 24/11/2022
~ 6 minutes
Data & Intelligence